The nexus between corporate governance, risk taking, and growth.
In this study we assess the impact of corporate governance on the risk investment behavior of firms and its implications on firms' growth rate. Using a sample of non-financial companies from 10 countries over a period leading to the recent global financial crisis, we documented that the corpora...
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Online Access: | https://doi.org/10.1371/journal.pone.0228371 |
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doaj-e1b20b8a9b8b427d825a56fd4a5add1a2021-03-03T21:27:52ZengPublic Library of Science (PLoS)PLoS ONE1932-62032020-01-01152e022837110.1371/journal.pone.0228371The nexus between corporate governance, risk taking, and growth.Alin Marius AndriesDaniela BalutelIulian IhnatovSilviu Gabriel UrsuIn this study we assess the impact of corporate governance on the risk investment behavior of firms and its implications on firms' growth rate. Using a sample of non-financial companies from 10 countries over a period leading to the recent global financial crisis, we documented that the corporate governance has a nonlinear (inverted U-shape) impact on the companies' investment risk, meaning that the investment risk is increasing up to a level of corporate governance of 0.61 (as measured by our comprehensive index), while at higher levels of corporate governance the investment risk is decreasing. For the models of sales growth and assets growth it is shown that predicted investment risk has a positive effect on firms' growth measures. Moreover, the two growth models are not moving independently and a shock to one of the growth measures (sales or assets) affects the other growth measure in the same direction. Additionally, we evaluated the effect of financial crisis on both the growth measures and the risk measure. The effect of financial crisis was captured in both measures in 2009, with higher impact on the growth of sales.https://doi.org/10.1371/journal.pone.0228371 |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Alin Marius Andries Daniela Balutel Iulian Ihnatov Silviu Gabriel Ursu |
spellingShingle |
Alin Marius Andries Daniela Balutel Iulian Ihnatov Silviu Gabriel Ursu The nexus between corporate governance, risk taking, and growth. PLoS ONE |
author_facet |
Alin Marius Andries Daniela Balutel Iulian Ihnatov Silviu Gabriel Ursu |
author_sort |
Alin Marius Andries |
title |
The nexus between corporate governance, risk taking, and growth. |
title_short |
The nexus between corporate governance, risk taking, and growth. |
title_full |
The nexus between corporate governance, risk taking, and growth. |
title_fullStr |
The nexus between corporate governance, risk taking, and growth. |
title_full_unstemmed |
The nexus between corporate governance, risk taking, and growth. |
title_sort |
nexus between corporate governance, risk taking, and growth. |
publisher |
Public Library of Science (PLoS) |
series |
PLoS ONE |
issn |
1932-6203 |
publishDate |
2020-01-01 |
description |
In this study we assess the impact of corporate governance on the risk investment behavior of firms and its implications on firms' growth rate. Using a sample of non-financial companies from 10 countries over a period leading to the recent global financial crisis, we documented that the corporate governance has a nonlinear (inverted U-shape) impact on the companies' investment risk, meaning that the investment risk is increasing up to a level of corporate governance of 0.61 (as measured by our comprehensive index), while at higher levels of corporate governance the investment risk is decreasing. For the models of sales growth and assets growth it is shown that predicted investment risk has a positive effect on firms' growth measures. Moreover, the two growth models are not moving independently and a shock to one of the growth measures (sales or assets) affects the other growth measure in the same direction. Additionally, we evaluated the effect of financial crisis on both the growth measures and the risk measure. The effect of financial crisis was captured in both measures in 2009, with higher impact on the growth of sales. |
url |
https://doi.org/10.1371/journal.pone.0228371 |
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